Hi everyone,
Please advise how a interest only loan can work like a line of credit loan.
Giving a example please.
Thank you for your help.
Many offer free redraws, so you can put your money in and take it out, just like a LOC, but without the cheque book.
Or
Many offer 100% offset accounts. So you could withdraw some funds and store them in the offset, get a cheque book attached, and use the funds from there. You would only pay interest on the loan less the money in the offset, so it should work out the same. it may even save you some $$ as many lenders charge more for the LOC.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry.
So its correct to say for a interest only loan you could redraw up to the original loan amount as the balance does not change since your only paying the interest charged and for principal and interest loans you could redraw up to the scheduled balance which reduces as you are paying some of the principal. In this way it works like a line of credit.Hi Joseph
Yes correct however just be careful in doing a redraw to esnure the interest is deductible if you are using the funds for investment.
Richard Taylor | Australia's leading private lender
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